FOREX Chart Of The Day: AUDUSD Forms Divergence
As AUDUSD continues to trend higher we take a look at the key levels to look out for
as the price starts to show bearish divergence on the higher timeframes.
Watch the video to learn more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to take a look at AUD/USD and look at the key levels of interest because the price is continuing to move to the upside, but what we noticed from the weekly analysis was the fact that the market has made a higher high, and the RSI has made a lower high.
So again, there is some slight divergence between the indicator and the price. Now typically, when we see these types of moves with the divergence, we do get a strong reversal, and seeing it on a weekly timeframe adds a little bit more weight to the potential of the market moving lower.
Now typically, this time of the year, we know that the US Dollar is weak. We’ve spoken about this on numerous videos now. And so, we were expecting the market to climb slightly higher before seeing that move down, and what I’d really like to see from this market, in particular, is a nice bearish week before we start seeing those pullbacks.
So, looking at the charts right now, we can see there’s quite a clear level around 0.7. If it’ll let me drag 0.7695, 0.77 would be an interesting area to see the market come and retest if we were going to see that move down. But also, we have a decent level around 0.76. So, we’ve got about 100 pip range where the market could retest and then look for that downside from there. So, with a number of confluences so far, we have the price making higher highs, while the RSI is making lower highs. We have the fact that the US Dollar loses value over this time of the year heading into next year, where we typically see US Dollar strength.
So, are we going to see one last rally up? Very much like our analysis over on NZD/USD. However, we don’t really have much in the way of the commitment of trader signals on AUD/USD. That’s why I prefer the NZ Dollar reversal at the moment.
But typically, Aussie and Kiwi will follow similar paths when it comes to trading against the US Dollar. We can see, here, that the market finds support, resistance, then the market drops away. We haven’t retested that structure again yet. So, I’m expecting the market to push slightly higher then look for that reversal, and I’m going to be looking for a nice weekly bearish rejection of this zone before considering a trade in this market. If we go to that four-hour timeframe, the price is continuing to move in an uptrend. We can see that from this view, here, the market broke into new highs. Since then, we haven’t really changed the cycle on this four-hour timeframe. We’ve had a couple of false breakouts but nothing really considerable in changes in trends. So, I’m expecting the market to rally into this zone – a nice change in cycle forming a weakly bearish candle, and then look for the rejection from there.
In the short term, you could look for some potential long positions at this point. We’ll go down to the hourly timeframe. For instance, this area, here at the moment, is looking quite good. We can see, looking left, that the market has reacted from prices around 7546 numerous amount of times recently. So, if we get a break and retest in the short term, you could look for a long up into that 0.76 level. But then, we’re looking for that potential change in direction at that point. I’ll leave it there.
Thanks for watching this video update and I’ll speak to you soon.
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